Adbrands Weekly Update 29th April 2010
A weekly round up of key news about 
leading advertisers, agencies and mediaowners
 
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Four of our favourite ads this week: 

John Lewis "Never Knowingly Undersold"
by Adam & Eve London

Lipton Yellow Label "Lalo Schifrin"
by DDB Paris

Philips "The Gift"
by Carl Erik Rinsch/DDB London/RSA Films

Samsung "The 3D Truth in Old Masters"
by The Viral Factory
London

Update only subscribers: click here to view Ads of the Week

Please note: If you are attempting to view these ads shortly after receiving this mailout on a Thursday, you may find that the video streams run slowly because of heavy simultaneous demand from other Adbrands subscribers who have also just received the same email. Please wait for the ads to load before pressing play, or try again later. Apologies for any inconvenience.

Apologies again for last week's unscheduled absence, caused by a certain Icelandic volcano. That delay left us with a large pool of potential Ads of the Week, so picking four has been quite a task. Here's what we ended up with. First up, a lovely new extended film from London indie Adam & Eve for department store John Lewis. Top marks to Adam & Eve, which is beginning to establish a reputation as one of London's best creative boutiques. The ad celebrates the store's long-established heritage as one of the country's best-loved retailers, and also heralds the return of the "Never Knowingly Undersold" sales policy to its marketing. For the benefit of non-Brits, for years John Lewis promised to discount the price of any goods sold for less by another retailer. That policy was effectively dropped a couple of years ago, or at least restricted to stores within an eight-mile radius of a John Lewis outlet, because of fierce competition from out-of-town retailers. It was quietly reintroduced once again at the end of last year, and is now to become central once again to the store's marketing.

Another great ad from DDB Paris for Lipton tea, this time for the brand's traditional Yellow Label brew rather than the Ice Tea variety. I won't spoil the gag by saying too much, but it's a great way of illustrating the claimed benefits of tea as an aide to inspiration. Here, celebrated real-life Brazilian composer Lalo Schifrin struggles to complete a new score. That's not really him by the way. The man himself is now in his late Seventies, and still active, but despite a formidable output over the years, it's this 45-year-old theme for which he is best-known.

You should have received a special email from us earlier this week featuring the four other ads in Philips' new Parallel Lines short film series. In case not, a quick recap: Philips and DDB London, working with Ridley Scott's RSA Films production company, commissioned five directors to deliver a follow-up to last-year's award-winning Carousel spot for the Philips Ambilight cinema TV, which projects a coloured aura to match the dominant colours on-screen. All five films had to be based on the same dialogue script. It's a fascinating project. This, we feel, is the best of the five, and arguably the most spectacular. (See here for the others). Carl Erik Rinsch is the director. So what's really in the box? Surely a MacGuffin not a unicorn.

And finally, an absurd riff on the idea of 3D technology, developed by The Viral Factory to promote Samsung's 3D TVs. High-class gets low-class, but you can't help but laugh.


In the news this past week: Brands & Advertisers

The volcanic ashcloud was one of the biggest stories of the past few weeks as the closure of airspace in the UK and much of the rest of Europe grounded virtually all the region's airlines and caused massive disruption to companies as well as holidaymakers trying to return home (including your humble author). The cost to airlines from lost business and passenger compensation has been estimated by the European Commission at as much as €2.5bn. It has been suggested that national governments assist with some of these costs, adding yet another burden to Europe's finances on top of its huge commitment to support Greece's collapsed economy. There's no end in sight just yet to Europe's economic woes. Among the winners from the crisis were European rail operators and the cross-channel ferry companies and Eurostar, who were forced to lay on additional services to cope with the massive increase in passengers to and from the UK. Also video conferencing suppliers Cisco, Citrix and Logitech, who reported sharp spikes in usage as stranded businesspeople resorted to video connections to replace cancelled meetings.

America's SEC financial regulator kicked off a tough new crackdown on investment banks by issuing charges against Goldman Sachs and one of its senior executives, Fabrice Tourre, for civil fraud. The most serious of the charges is the allegation that during 2007 the bank in effect promoted a mortgage-backed CDO product known as Abacus to clients while also secretly betting that the security would fail. Tourre was the VP largely responsible for creating and selling the product. Just one of the clients affected by Abacus was AIG, which generated a loss of around $2bn on that investment alone. According to the SEC, Goldman actively attempted to sell to its clients mortgage-backed investments which it wanted to remove from its own balance sheet because they were considered to be increasingly risky. More generally, the bank is being accused of helping to exacerbate the meltdown in the subprime market by actively betting that it would collapse. Goldman vigorously denied the charges and said it would fight every allegation, but the news of the lawsuit sent shockwaves through Wall Street and has prompted European regulators to open their own investigation. As the case opened in New York this week, the Senate's investigating committee also made public internal emails between Goldman executives in which they disparaged the CDO products they were promoting. One of these, a $1bn CDO known as Timberwolf, played a significant role in the collapse of rival investment bank Bear Stearns, which was was one of the biggest investors in the product. The Timberwolf CDO lost as much as 80% of its value in just five months before eventually being discontinued in 2008. Democratic senator Carl Levin, who chairs the investigation said, "[Goldman’s] misuse of exotic and complex financial structures helped spread toxic mortgages throughout the system. When the system finally collapsed... Goldman profited from the collapse." The case is likely to prove a trial of strength between the SEC, desperate to prove its efficacy in regulating the financial markets, and the Goldman Sachs organisation, which is intent on retaining its gleaming reputation at all costs.

HP has agreed to acquire struggling wireless handset maker Palm for around $1.2bn in cash and debt. The deal brings to an end several months - if not years - of declining performance at Palm. A pioneer in the smartphone sector, Palm's early lead was completely eclipsed by the rapid growth of BlackBerry and Apple's iPhone. The business will become part of HP's personal computer division, although it will remain a separate unit, still under the management of CEO Jon Rubinstein, for the time being at least. Separately Apple postponed the international launch of its iPad tablet until the end of May because of what it said was stronger than anticipated demand in the US. The company claims to have sold 500,000 iPads in the first week on-sale.

Fast-expanding US telecoms group CenturyTel launched its biggest acquisition to-date, with a $10.6bn agreed deal for Qwest, one of the last of the so-called "Baby Bells" spawned by the break-up of the old AT&T in the 1980s. CenturyTel will combine its new purchase with Embarq, the regional fixed line group formerly owned by Sprint, which it acquired in 2009. At the same time, CenturyTel is to rename itself as CenturyLink. It said it expected to retain the Qwest name for business customers, but would offer residential services under its new name. The enlarged group will become America's third-largest fixed line operator with sales of almost $20bn and around 17m lines. (Verizon has 32m, AT&T has almost 27m).

Car rental giant Hertz sealed a deal to acquire smaller rival Dollar Thrifty for $1.3bn. It said it would maintain the Dollar and Thrifty brands alongside its own. The acquisition is designed to broaden Hertz's customer profile. The global #1 is strongest in the US among business travellers who rent mid-week, especially from airport locations. The Dollar and Thrifty brands on the other hand are used most commonly by weekend leisure renters, and the acquired brands have a stronger presence in urban centres and also in Europe, where Hertz is still comparatively weak.

In other merger news, US Airways walked away from talks with rival airline United after it emerged that the latter had also reopened negotiations with Continental. United and Continental have been involved off and on in merger talks several times in the past, but observers expect current discussions to be more likely to reach a successful conclusion because of the improving fortunes of both companies. A deal could come as soon as this weekend.

Fiat Group announced plans to split itself in two, with its heavy trucks, agricultural machinery and construction equipment businesses spun off into a separate company, to be named Fiat Industrial. The passenger car and automotive components divisions will remain as the core of the new Fiat Automobiles Group, which also now includes US-basd Chrysler. The separation is expected to be completed by the end of 2010 provided financial markets continue to improve.

Coca-Cola increased its shareholding in UK smoothies manufacturer Innocent from a minority position to 58%, and is expected by analysts to take full control of the business within the next year or two. For the time being, the company will continue to be run by its original founders, Jon Wright, Adam Balon and Richard Reed. Separately Coke announced a major restructuring of its European operations, with ten regional country units merged into four new businesses of Iberia, Germany, North West Europe & Nordics (NWEN) and Central & Southern Europe. The current Coca-Cola GB & Ireland unit is folded into Coca-Cola NWEN alongside France, the Benelux markets and Scandinavia. Coca-Cola GB president Sanjay Guha was named as marketing & Olympics director for the region. The restructuring also affects local marketing departments. Long-serving UK marketing director Cathryn Sleight is leaving the company, and her position is to be terminated. Instead Michel Gotlib was named as integrated marketing communications director for the NWEN region, working out of the Paris office. There were also changes at Coke's Atlanta HQ. Katie Bayne moved to a new role as president & general manager for North America sparkling beverages. She was replaced as chief marketing officer North America by Beatriz Perez.

In other personnel news, MasterCard CEO Robert Selander will step down in July, to be replaced by Ajay Banga, currently president & COO. Selander will remain vice chairman until his retirement at the end of the year. Unilever appointed Eugenio Minvielle, previously head of Nestle France, as its new EVP, North America, reporting to new Americas president Dave Lewis. Andy Bond, CEO of Walmart's British subsidiary Asda, announced his decision to move to a newly created role as part-time chairman of the business as soon as a successor can be found. Burger King confirmed Mike Kappitt as chief marketing officer North America. He had been filling in on an interim basis for former global CMO Russ Klein, who left the company last year. Burger King is still looking to recruit an international CMO. Porsche named Bernhard Maier as executive director for global sales and marketing, replacing Klaus Berning. John Nichols was named as head of marketing for Nokia UK, replacing Will Harris, now marketing director for Nokia Asia. MT Carney, previously a partner at the US operations of media planning agency Naked, was named as chief marketing officer for Walt Disney Studios.

Brand licensing specialist Iconix, acting in partnership with the family of cartoonist Charles M Schulz, acquired the Peanuts cartoon strip brand and its much-loved characters, including Snoopy and Charlie Brown. The brands were previously owned by the newspaper publisher EW Scripps which had been responsible for syndicating the hugely successful strip around the world. Iconix and the Schulz family are paying around $175m for the Peanuts brand family, and have also acquired from Scripps other brands including Dilbert and Fancy Nancy. It is Iconix' first venture into character-based licensing. It is best-known for its portfolio of fashion brands including Joe Boxer, Candie's and London Fog.

Luxury giant LVMH announced plans to expand its presence in the hotel market, with plans to open two resorts in the Middle East under the Cheval Blanc name, derived from the high-end Bordeaux vineyard also owned by the group. It took its first step into the hotel market in 2006, opening the Cheval Blanc hotel and spa in the French ski resort of Courchevel in 2006. The new properties will be joint ventures with Egyptian developer Orascom.


In the news this past week: Agencies

Several of the major marketing groups released 1Q results. Havas returned to growth with revenue up 1.5% compared to the same time last year, and its first quarterly increase since 2008. On an organic basis, Europe remained under pressure with comparable revenues falling by a further 3%. However that decline was offset by 5% growth in North America and a jump of almost 25% in Latin America. Publicis did better still with a 3% rise in organic worldwide revenue to almost €1.2bn. On a reported basis, the increase was 8%. Neither group gave details of profitability. Omnicom reported a 2% rise in organic worldwide revenues (6% reported), to $2.9bn. Net income was down just under 1%. Interpublic was still in decline, with organic revenues down almost 3% to $1.3bn, as a result of continuing weakness internationally. The reported difference was positive 1%, and US revenues were up almost 3%. Net loss narrowly slightly from $74m to $72m.

Publishing giant Hearst is in advanced negotiations to acquire digital agency iCrossing, with a price tag expected to be in the region of $375m. The business specialises in search marketing and social media. In the UK, digital agency Grand Union was acquired by FullSix International for £15m. It is expected to maintain the Grand Union name and will establish offices in other markets, with the US, Spain and Germany first on the list.

Swedish digital agency Farfar is to close. Widely regarded as one of the country's pioneering web shops, the business has suffered a steady exodus of key staff since it was acquired by Aegis in 2005. The last of the agency's four founders left last month. Until now, Farfar has served as one of the creative hubs for Aegis's global digital network Isobar. Other closures may follow as Isobar attempts to restructure its disparate collection of individual regional agencies to form a more cohesive global network.

Holding companies Interpublic and MDC Partners tussled in court after the bigger company accused MDC's Kirshenbaum Bond Senecal & Partners of poaching staff. Lori Senecal, previously a senior executive at IPG's McCann, joined Kirshenbaum Bond as partner last year and has since raided her former employer for several staff, most recently chief growth officer Matt Weiss, who is joining KBS as chief of staff. The case looked at first as if it would trigger a lengthy legal battle, with IPG also alleging other violations including disclosure of confidential information and client poaching, but in fact it was settled out of court in less than a week. No damages were paid, and MDC and KBS agreed not to take on any further McCann staff or clients for at least another six months.

Interpublic also announced two significant changes to the McCann network. San Francisco creative boutique TAG, previously a unit of McCann's local office, was relaunched as a standalone agency, under the new name AgencyTwoFifteen. The shop is best-known for work for cornerstone client Microsoft, mainly on software for the Xbox console. Campaigns for sci-fi shoot-em-up Halo have won several awards in the past. The decision to split TAG out as a standalone entity is presumably part of the group's plan to stop the continuing erosion of its business with Microsoft. Separately, McCann inked a deal with legendary Brazilian adman Washington Olivetto. His W/Brasil agency is being acquired and absorbed into McCann's local office to form newly renamed WMcCann. Olivetto himself takes on the role of chief creative officer for Latin America.

Photon Group, Australia's biggest marketing service group and parent of local agency brands including BMF and BWM as well as UK-based Naked, appointed Jeremy Philips as its new CEO, replacing Matt Bailey, who resigned earlier in the year. Philips joins from News Corporation's New York offices, where he was EVP and a key adviser to Rupert Murdoch. Separately, Naked announced plans to open its first office in Germany. Ingmar Janson, formerly a planning chief at Scholz & Friends, will lead the business.

There were numerous other personnel moves. DDB Chicago appointed Ewan Paterson, previously executive creative director of CHI & Partners in the UK, as its new chief creative officer. That appointment brings to an end a two year search triggered by the tragic suicide of previous creative chief Paul Tilley. CHI in turn poached Jonathan Burley from Leo Burnett London to replace Paterson. Saatchi & Saatchi New York's executive creative director Gerry Graf also handed in his resignation, and will start up his own indie boutique in the summer. Publicis named Steven Althaus, currently head of global brand management for insurer Allianz, as the new CEO of its operations in Germany and Austria. Lisa Thomas was named as chief executive of M&C Saatchi Group UK, reporting to regional chairman Tim Duffy. She was previously head of the group's direct marketing arm Lida. Marketing director Camilla Harrison was promoted to COO.

In what could prove a devastating blow, Campbell-Ewald is to lose the rest of the Chevrolet account to Publicis after a 90-year hold on the business. GM had already shifted Chevrolet's passenger car business to Publicis Mid-America earlier in the year. It's unclear as yet where this will leave Campbell-Ewald, which is part-owned by Interpublic. Although it retains some other GM business, Chevrolet was by far its biggest account.

In other account assignments, L'Oreal USA consolidated media buying with Universal McCann. Part of the business had been held by Zenith Media in New York. Optimedia retains planning on some brands. UM also captured global media for the Burberry fashion business. GlaxoSmithKline announced a review of media in its major European markets. The business is currently held in Western Europe by MediaCom and by Starcom MediaVest in Central & Eastern Europe. Dare was awarded digital advertising duties by UK supermarket group Sainsbury's. Goodyear Tires shifted US creative from McCann to GSD&M Idea City. Tissue and sanpro manufacturer SCA Hygiene and dairy producer Arla are both reviewing European media, currently held by Carat. Mars consolidate global creative for its Twix bar into the TBWA network. Cosmetics company Elizabeth Arden consolidated global media with PHD. For all other appointments, subscribers can access the full Adbrands Account Assignments database here


In the news this past week: Media

Apple unveiled plans for its own mobile advertising network, iAd, which will deliver ads to the iPhone, iPad and iPod Touch from this summer. The new service will, said Apple, allow advertisers to run campaigns that "combine the emotion of TV with the interactivity of the web". The company says it expects to deliver as many as 1bn impressions daily. That move heightened the rivalry between Apple and Google. The latter recently agreed to acquire mobile ad network AdMob, which currently derives around 40% of its business on ads for the iPhone. Separately, Twitter launched its first advertising service in an attempt to start raising serious income. The Promoted Tweets service allows advertisers to display a promotional message when users search for specific pre-selected keywords in areas such as sport, music and movies. Facebook also announced a major expansion of its service with what it called social plug-ins, a set of tools that allow third-party websites to embed Facebook-style functions within their own pages and let users share or recommend sites on their profile pages.

AOL agreed to sell its ICQ instant messaging service to Russian investment company Digital Sky Technologies for $188m. The Russian group already has a shareholding in Facebook as well as several local online services. AOL is looking for a buyer for social network Bebo. It will close the service it doesn't find one by the end of May.

BBC Worldwide, the commercial arm of the UK's BBC, confirmed that it is seeking what it described as a "partnership" with another company for its substantial magazine publishing division, the country's 4th biggest by circulation. Titles include TV listings weekly Radio Times, monthlies Top Gear, Good Food, Gardeners World and other titles. The move had been widely anticipated following the Corporation's strategic review earlier this year in which it said it planned to move away from "physical media" such as magazines and books in favour of digital. No further details have been issued regarding what sort of deal such a partnership would entail, but it could involve a joint venture or even a straight sale of the magazine business.

US talk show host Conan O'Brien, who quit as anchor of NBC's long-running Tonight Show earlier this year in an acrimonious row over a scheduling conflict with his predecessor Jay Leno, has secured a new home. He will launch a new late night cable show on Time Warner's TBS cable comedy channel in November. The move to pay-TV came as something of a surprise - O'Brien was rumoured to be in negotiations with Fox. Meanwhile, audience ratings suggest that NBC's controversial decision to prefer Jay Leno over O'Brien was the right one. Back in the chair at the Tonight Show, Leno's ratings have risen as much as 50% above O'Brien's average pull (although the audience demographic has also skewed older). As a result, the Tonight Show has recaptured the top slot it had lost under O'Brien to long-time rival Dave Letterman over at CBS.

Meanwhile, an even starrier presenter, Oprah Winfrey unveiled details of the new flagship show on her soon-to-launch signature network, OWN. The cable channel, a joint venture between Oprah's production company Harpo and Discovery Networks, will launch in 80m US homes next January as a replacement for the Discovery Health Channel. She will host a four-times weekly evening show in which she will travel around the globe to talk to celebrities and ordinary people. OWN also got a substantial bonus from the signing of a three-year advertising deal with P&G valued at more than $100m, covering traditional ad inventory as well as key product placements. That seal of approval from America's biggest advertiser months before the channel even launches is likely to persuade a stream of other big marketers to follow suit.

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Simon Tesler
Publisher, Adbrands